Quarter of mid-market firms intending to re-shore some or all business activities

Will Green is news editor of Supply Management
9 October 2014

A quarter of mid-market firms in the UK are considering re-shoring some or all of their business activities in the next three years, according to research.

The study, carried out by GE Capital UK and Warwick Business School, found procurement made up just over a fifth of the activities firms intended to bring back to the UK.

Reasons for re-shoring included management or control issues, advantageous business culture, productivity, rising overseas costs and access to skilled labour.

The research showed companies expected to see an average increase in annual revenues of 14. 8 per cent – or £3.8 million per firm – as a result of re-shoring, leading to a 12.1 per cent uplift in profits.

The study, involving interviews with 100 executives, said this would add £27.6 billion to national mid-market revenues annually and create more than 378,500 jobs.

In terms of the types of activities being re-shored, internal business services make up 23 per cent, followed by procurement (21 per cent), customer-facing services (19 per cent), manufacturing and production (19 per cent), and product development (18 per cent).

Activities earmarked for re-shoring are predominantly located in the Eurozone, with almost three-quarters of manufacturing activity relocating from the Eurozone or EMEA regions, though 28 per cent of customer-facing services and internal business functions are due to be re-shored from the Asia-Pacific region.

The research found London to be the most popular re-shore destination, followed by the South East, West Midlands, the North West and Yorkshire and Humber.

Ilaria del Beato, chief executive of GE Capital UK, said: “The synergies created by bringing back previously outsourced services to the UK, and closer to London, drive the predicted increase in revenues and will make a positive contribution to a stronger economy.”

Professor Stephen Roper, of Warwick Business School, said: “Historically, re-shoring activity has focused on regions outside London, yet our research indicates that mid-market firms see the value of being active in the capital, despite the high costs associated with doing business here. This suggests that rather than acting as an agent for rebalancing the regions, re-shoring may exacerbate the growing disparity between the London economy and the rest of the UK.”

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